BSP keeps policy, SDA rates

The Monetary Board (MB) of the Bangko Sentral ng Pilipinas (BSP) on Thursday announced that it has decided to keep the current key policy rates.

In a press briefing on Thursday, BSP Governor Amando Tetangco Jr. said that interest rates for the overnight borrowing or reverse repurchase facility is at 3.5 percent, while overnight lending or repurchase is at 5.5 percent. The reserve requirement ratios were held steady as well.

The interest rates on the special deposit account (SDA) facility were also maintained at 2 percent.

“The Monetary Board’s decision is based on its assessment that the inflation environment is likely to remain benign,” Tetangco said.

The BSP governor also said that baseline forecasts indicate that inflation will remain within target for 2013 until 2015, adding that inflation expectations also remain well supported.

This central bank’s target for inflation this year is at the 3-percent to 5-percent range.

Moreover, Tetangco said that domestic economic growth remains firm as it was driven by strong internal demand.

He added that economic activity in the coming months will still be supported by ample liquidity and strong bank lending.

“The Monetary Board noted that the risks to the inflation outlook appear evenly balanced. The modest pace of global economic activity could continue to temper the broad outlook for inflation,” the BSP governor stated.

Meanwhile, Tetangco said that power rate adjustments and the upward impact of sustained capital inflows on domestic liquidity could bring upside pressures in inflation.

“Keeping policy settings steady also allows time to assess the impact of recent fine-tuning in monetary operations. Recent global financial market developments also support an unchanged policy stance,” he added.

The BSP governor added that the MB is of the view that the manageable inflation outlook and robust domestic growth provide scope to keep policy settings steady for the time being.

“Going forward, the BSP will continue to pay close attention to evolving price and output conditions as well as asset market developments to ensure that policy settings remain consistent with safeguarding price and financial stability, while being supportive of sustained and balanced economic growth,” Tetangco said.